FACTORS AFFECTING INVESTMENT DECISIONS AMONG LISTED FIRMS IN THE NAIROBI SECURITIES EXCHANGE

Authors

  • Prince Worzie Department of Business Administration, School of Business and Economics, Kenya Methodist University, Kenya

DOI:

https://doi.org/10.29121/ijetmr.v7.i2.2020.533

Keywords:

Investment Decisions, Nairobi Securities Exchange, Kenya

Abstract

The importance of investment decision-making cannot be overstated since many of the factors that result in a firm’s success or failure are directly tied to the choices of decisions made. When wrong investment decisions are made, they are not easily reversible and if the firm persists or reverses them they may lead to bigger losses. It is for this reason that this research sought to investigate factors affecting investment decisions among listed firms in the Nairobi Securities Exchange. The study focused on the following factors: financial market information, investment risk, investor’s financial knowledge, and firms’ profitability to establish whether they influence investment decisions. The study employed a descriptive survey design and targeted 178 finance managers of the 67 firms listed on the NSE. Stratified and purposive sampling techniques were adopted in this study and a questionnaire was used to collect data. The researcher employed descriptive and inferential statistics to analyze data collected from the study. The results were analyzed and presented using tables. Based on the results, the researcher concludes that the four independent variables; financial market information, investment risk, firms’ profitability and investor’s financial knowledgesignificantly influence investment decisions of firms listed on the NSE.

Downloads

Download data is not yet available.

References

Afrifa, G. A., & Padachi, K. (2016). Working capital level influence on SME profitability. Journal of Small Business and Enterprise Development, 23(1), 44-63. DOI: https://doi.org/10.1108/JSBED-01-2014-0014

Avram, E. L., Savu, L., Avram, C., Ignat, A. B., Vancea, S., & Horja, M. I. (2009). Investment decision and its appraisal. Annals of DAAAM& Proceedings, 1905-1907.

Baker, H. K. & Nofsinger, J.R. (2010).Behavioral Finance: Investors, Corporations and Markets. New Jersey: John Wiley and Sons. DOI: https://doi.org/10.1002/9781118258415

Baker, H. K., & Filbeck, G. (Eds.). (2013). Portfolio theory and management. Oxford University Press.

Binh, T. Q. (2014). A Case study of voluntary disclosure by Vietnamese Listed Companies. International Journal of Management Sciences and Business Research, 3(4).

Buonanno, G., Faverio, P., Pigni, F. , Ravarini, A. , Sciuto, D. & Tagliavini, M. (2005). Factors affecting ERP system adoption: a comparative analysis between SMEs and large companies. Journal of Enterprise Information Management, 18(4), 384-426. DOI: https://doi.org/10.1108/17410390510609572

Elton, E. J., & Gruber, M. J. (1997). Modern portfolio theory, 1950 to date. Journal of Banking & Finance, 21(11-12), 1743-1759. DOI: https://doi.org/10.1016/S0378-4266(97)00048-4

Erkekoglu, H., & Kilicarslan, Z. (2016). Do political risks affect the foreign direct investment inflows to host countries? Journal of Business Economics and Finance, 5(2), 218-232. DOI: https://doi.org/10.17261/Pressacademia.2016219263

Fama, E. F., & French, K. R. (2004). The capital asset pricing model: Theory and evidence. Journal of economic perspectives, 18(3), 25-46. DOI: https://doi.org/10.1257/0895330042162430

Farooq, A., & Sajid, M. (2015). Factors Affecting Investment Decision Making: Evidence from Equity Fund Managers and Individual Investors in Pakistan. Research Journal of Finance and Accounting, 6(9), 2222-1697.

Frias-Aceituno, J. V., Rodríguez-Ariza, L., & Garcia-Sánchez, I. M. (2014). Explanatory factors of integrated sustainability and financial reporting. Business strategy and the environment, 23(1), 56-72. DOI: https://doi.org/10.1002/bse.1765

Goldstein, I., & Yang, L. (2017). Information disclosure in financial markets. Annual Review of Financial Economics, 9, 101-125. DOI: https://doi.org/10.1146/annurev-financial-110716-032355

Hung, A., Heinberg, A., & Yoong, J. (2010). Do Risk Disclosures Affect Investment Choice?. DOI: https://doi.org/10.7249/WR788

Kamuti, J. M., & Omwenga, J. (2017). "Factors influencing investment decisions in Nairobi Securities Exchange: A case of Dyer & Blair Investment Bank Limited." International Academic Journal of Economics and Finance, 2(3), 1-15.

Kaplan, R. S., & Mikes, A. (2012). Managing risks: a new framework. Harvard Business Review, 90(6), 48-60.

Kefela, G. T. (2010). Promoting access to finance by empowering consumers-Financial literacy in developing countries. Educational Research and Reviews, 5(5), 205-212.

Kofarbai, H. Z., & Zubairu, M. (2016). Efficient market hypothesis in emerging market-a conceptual analysis. European Scientific Journal, 12(25). DOI: https://doi.org/10.19044/esj.2016.v12n25p260

Kothari, C. R. (2004). Research methodology: Methods and techniques. New Age International.

Laffont, J. J., & Maskin, E. S. (1990).The efficient market hypothesis and insider trading on the stock market. Journal of Political Economy, 98(1), 70-93. DOI: https://doi.org/10.1086/261669

Lawrence, A. (2013). Individual investors and financial disclosure. Journal of Accounting and Economics, 56(1), 130-147. DOI: https://doi.org/10.1016/j.jacceco.2013.05.001

Makori, D. M., & Jagongo, A. (2013). Working capital management and firm profitability: Empirical evidence from manufacturing and construction firms listed on Nairobi securities exchange, Kenya. International Journal of Accounting and Taxation, 1(1), 1-14.

Murumba, K. (2012). Performance Measures for Mutual Funds Performance. An Empirical Review: http://erepository.uonbi.ac.ke.

Nye, K., Pete, W. & Cinnamon, H. (2013). Personal Financial Behavior: The Influence of Quantitative Literacy and Material Values. Numeracy, 6 (1):23-26.

Osabutey, E. L., & Okoro, C. (2015). Political risk and foreign direct investment in Africa: The case of the Nigerian telecommunications industry. Thunderbird International Business Review, 57(6), 417-429. DOI: https://doi.org/10.1002/tie.21672

Pilbeam, K. (2018). Finance & financial markets. Macmillan International Higher Education. DOI: https://doi.org/10.1057/978-1-137-51563-6

Popa, A. E., & Ciobanu, R. (2014). The financial factors that influence the profitability of SMEs. International Journal of Academic Research in Economics and Management Sciences, 3(4), 177. DOI: https://doi.org/10.6007/IJAREMS/v3-i4/1117

Reilly, F. K., & Brown, K. C. (2006).Investment analysis and portfolio management (Thomson/South-Western). Ch. 5, Securities Market Indexes.

Roberts, B., Struwig, J., Gordon, S., Viljoen, J., & Wentzel, M. (2012). Financial literacy in South Africa: Results of a baseline national survey. Pretoria: Financial Services Board.

Rusu, M. (2013). International Economic Conference of Sibiu 2013 Post Crisis Economy: Challenges and Opportunities, IECS 2013 Smart Specialization a Possible Solution to the New Global Challenges. Procedia Economic and Finance, 6, 128-137. Sibiu, Romania: Curran Associates. DOI: https://doi.org/10.1016/S2212-5671(13)00124-X

Sachse, K., Jungermann, H., & Belting, J. M. (2012). Investment risk–The perspective of individual investors. Journal of Economic Psychology, 33(3), 437-447. DOI: https://doi.org/10.1016/j.joep.2011.12.006

Souza, T. T., & Aste, T. (2019). Predicting future stock market structure by combining social and financial network information. Physica A: Statistical Mechanics and its Applications, 535, 122343.

Downloads

Published

2020-02-29

How to Cite

Worzie, P. (2020). FACTORS AFFECTING INVESTMENT DECISIONS AMONG LISTED FIRMS IN THE NAIROBI SECURITIES EXCHANGE. International Journal of Engineering Technologies and Management Research, 7(2), 124–142. https://doi.org/10.29121/ijetmr.v7.i2.2020.533